Friday, January 27, 2012

The Benefits of Taking Professional Financial Advice

Taking control of your finances can be an important step in securing your financial future. Taking professional financial advice can help you on your way.

Many of us will go through life without ever seeking financial advice from professional financial advisor, taking advice instead from friends, colleagues and online resources. While this may serve your needs to a certain extent you could be losing out.

You may want to seek professional financial advice if, for example:

1. You are considering taking out a mortgage

2. You are looking to join a pension scheme

3. You are looking for an insurance deal

4. You are considering taking an annuity

5. You are looking to make an investment

The financial market is a complex place, with a huge range of products available whatever kind of service you are looking for. From mortgages and investments to savings and pensions, the vast array of products in each of these areas can be bewildering when trying to find the option that will best suit your future financial needs, and this is where taking professional financial advice could help you.

There are three main types of financial advisor available. Those tied to one provider, those tied to a number of providers, and independent financial advisors. If you're looking for financial advice that will help you to make sense of the full range of products available on the market, it is a good idea to seek out a reliable independent advisor.

You will usually need to pay for professional financial advice, so you should always make sure you understand what your advisor is going to charge for a service before proceeding. You should also check that any advice taken comes from a financial advisor who is registered with the Financial Services Authority.

Whether you are seeking specific advice or general advice for future savings and investments a professional independent financial advisor may be able to help you to get the best deal for your money.

It is an independent financial advisor's job to have an excellent understanding of the market and to tailor their service to your needs. With new products coming onto the market every day this can save you a lot of trouble and ensure that the financial advice that you receive is coming from a knowledgeable source.

The Importance of Financial Advice in Your Retirement Planning

After retiring the first thing you are going to think is about sources to obtain income for the rest of your life. Numerous folks plan differently to invest their retirement income. There are plenty of useful options lying next to you to choose from. Financial advice is a great tool in your hands to choose the right methods to raise income after you get retired in accordance with your needs and requirements. Financial advice is also very beneficial in effective personal financial planning. It helps to take you in the right directions instead following trial and errors.

Without any questions, the financial advice taken from a reliable financial advisor will turn your retirement income into a profitable investment. Ordinary folks do not carry expertise and skills to deal with financial issues as accurate as a certified financial planner. Often people do not realize the importance of taking financial advice in their retirement planning and later find themselves in a state of hassles and complexities. The modern world of technology has made it simple for you to get financial advice with online financial support facility. With the effort of just few clicks, you can access certified financial planner on your computer's screen at the comfort of your home. It is very simple and easy and does not require any professional expertise. You may utilize this great facility with a little knowledge of computers and browsing.

You should always ensure that you are taking financial advice from a right person as the success of your personal financial planning is dependent on this very step. A good financial advisor should carry a proper understanding and knowledge to deal with various investment tools such as, 401 (k), stocks, Individual Retirement Accounts, Roth Accounts, taxation, bonds, asset allocation, etc. A financial adviser will help you in both cases whether you are looking for short term or long term investment goals. In cases where you are looking for short term goals, financial advisor may recommend you to invest in less volatile investment. But on the other hand, if you are after long term financial goals then financial advice would be in favor of more volatile investments to get ma rewards. Financial advisor takes the responsibility to assist individuals in effective personal financial planning with low risk factors involved. Financial consultation for personal financial planning may vary from person to person and financial advisor can help in determining the right choice.

Financial Advice: Rebuilding A Relationship of Trust

"We can't legislate wisdom or passion. We can't legislate competency. All we can do is create the structures and hope that good people will be appointed who will attract other good people - people who will make careers and listen and see to it that never again do we go through what we have gone through."

Connecticut senator, Chris Dodd, as quoted in The New York Times, July 15, 2010

With the recent passage of the historic Financial Regulation Bill, the transgressions of the financial industry and new provisions designed to prevent these types of excesses in the future have once again taken center stage. The legislation comes at a time when mistrust of financial services is epidemic. Nervous investors traumatized by losses and mismanagement of their funds wonder how to go about getting reliable and trustworthy advice.

Not long ago I came across a small column in the Business section of The New York Times Sunday edition, entitled "Beware Advice That's Generic." I thought, "What's wrong with offering advice that may have a broad general application?" I realized that if people mistake such advice as directed towards them specifically, it could end up doing them a disservice. This led me to the larger question, in relation to financial matters, whose information and advice can you trust?

Three Suggestions

This is a big issue and one that deserves careful thought. I would like to offer three basic ideas to help put you on firmer ground when seeking and evaluating financial advice. First, become more independent. Take more responsibility for your financial well-being. Second, commit to the selective use of a number of different resources. Third, establish a relationship, or two, with trusted financial professionals.

Taking more responsibility means educating yourself about financial subjects. Pick a topic and research it. Maybe you want to learn more about bonds or determining a good investment mix. Having more information will help you make better financial decisions. While you will probably still want to seek professional advice, the more you know yourself the better your decisions will be. The old saying is true- no one cares as much about your money as you do.

Beware of Sound Bites and White Noise

Choosing your resources for information selectively is extremely important. People seem to want sound bites and easy answers. But in personal finance there are few easy answers and the sound bites can lead you astray if you aren't careful. I would encourage people to avoid the television and radio. There is too much "white noise" being passed off as valuable information about the markets.

Pare down both the quantity of information you take in, as well as the focus of your information gathering. Investigate subjects of particular interest to you. I find the personal finance articles in The New York Times, The Wall Street Journal and Morningstar to be of very high quality. And, referring back to the article I saw in The Times - be wary of generic advice that doesn't apply to your situation!

Financial Relationships

Becoming better informed is an important part of taking charge of our financial health. However, we recognize the need for expertise. Much as the family physician is a trusted source of advice on many important issues, he is not the one we would go to for a knee replacement. We may very well turn to him, though, for a good referral to the appropriate specialist. In much the same way, we need to cultivate those relationships we already have with trusted professionals in various areas of our financial lives. These could be personal bankers, accountants or estate-planning attorneys. Ask these professionals, as well as neighbors and friends, if they can recommend a financial planner whom they like. Many financial advisers offer free initial consultations. Subscribe to their newsletters. Get to know who they are and how they might help you.

In conclusion, educating ourselves is really our best response to the skepticism and mistrust we may feel when looking for sound financial guidance. Seek out a few good sources of information, and begin to develop a relationship with a financial professional. Don't wait until an urgent need leaves you scrambling to find someone. Engage simultaneously in all three of the steps we have discussed. The old adage applies here: dig your well before you need it.

And finally, you still need to be skeptical and to ask a lot of questions. By all means, get a second opinion.

Independent Financial Advice

There are three main categories of financial advisors.

Tied advisors work for an insurance company or a bank and can advise you products of their companies only. Multi-tied advisors have a bit more freedom and can offer you products of several companies. Independent financial advisors, or IFAs, will give you advice from the whole market.

But offering whole of market advice is not the only difference of the independent financial advisor from tied and multi-tied advisors. IFAs do not represent a definite company but they act as the representatives of their clients and their responsibility is to work in the best interest of their clients.

Once an independent financial advisor clarified your current financial details, your financial needs and possibilities, he starts to work for you and does some research to find the best preferable financial products for your individual situation.

The importance of independent financial advice is evident. Everybody can use an independent financial advice regardless of circumstances, for instance, to make the most of their money or investments, to have good advice on debts, mortgages and loans.

This kind of financial advisors can offer unbiased advice on a lot of options suited to your individual circumstances because they have years of experience in dealing with financial products.

Some web sites are created specially to give web surfers information about financial advice and place local independent financial advice for consumers and businesses.

Modern online directories are based on the latest industry information that is constantly updated. The directories are accessible easily and available on the internet. Different money-related information will help consumers make correct financial decisions.

The financial advice is always online and you should feel free to surf the internet and read informative articles and recommendations given in them. They will help you to stay informed and improve your financial situation. Health and Fitness Computers and Technology Adventure Travel Music and Entertainment Leadership Improvement Financial stability Forex Forum News and Social Lifestyle Health Care info/rmation Health Insurance Plan Home Loan Learning Center Personal Care Product Real Estate sites 21st Century Home improvement Contractors House Payday Loan Medical Health Insurance Reviews of Car Insurance Companies

Quality Financial Advice

With good financial advice you will be able to meet your life goals through the proper management of your finances. Your life goals may include your own home, your children's education, planning for retirement and many other vital things. Quality financial advice will help you to see the whole picture and following the advice you can create a financial plan to reach your life goals.

You can use many different sources of information to manage your money. For example, magazines and newspapers, the Internet and television, even your friends and family can give you a lot of financial advice, but it would be wise to look for the professional expertise and find a qualified financial planner who will help you to make a proper financial plan.

But what is a quality advice? And how can you know that the advice you get is quality indeed? There are several aspects that will help you to identify quality financial advice.

It must help you: to determine your life goals; to understand your financial background such as your debts and commitments; to see the difference between your present day and your future financial situation where you desire to be; to create your financial plan including your risks; to find suitable investments for your individual conditions; to review your financial plan regularly to be up-to-date in accordance with the changing economic conditions and circumstances.

Getting quality financial advice you obtain a number of benefits: control over your finances; a long-term relationship with a financial planner to achieve your financial goals; opportunity to change your strategy due to regular reviews; a picture of your financial future drawn by a professional; understanding of your risks and how to manage the risks.

Avoid Common Pitfalls Of Taking Financial Advice

The short answer is to use an Independent Financial Advisor, investigate them thoroughly and make sure you understand any product you buy.

However many people are unsure exactly what is a Independent Financial Advisor or IFA so I will explain the types of Financial Advisor, how an Independent Financial Advisor is different from the other types of advisor and their obligations to a client.

What is a Independent Financial Advisor?

An Independent Financial Advisor (IFA) provides financial planning, offers unbiased advice and recommends suitable financial products from the entire UK market.

All IFAs are regulated by The Financial Service Authority (FSA) which requires them to hold strict qualifications and show a high level of competence.

The term Independent Financial Advisordates from 1988 when the UK government introduced a polarisation regime where an Advisor was either tied to a single insurer or was an independent practitioner.

Since 2005 the UK market has been depolarised. There are now four type of Advisor.

Independent financial Advisors who work with products from the whole of the financial market and allow their customers the option of paying by fee or commission.
Whole of market Advisors, who work with one company but only on a commission basis.
Multi tied – work for more then one financial organisation.
Tied – work for one organisation, typically a high street bank.

When Choosing a Financial Advisor ask whether he or she is independent, multi-tied or tied.

What qualifications does a Independent Financial Advisor need?

There are no set entry requirements for becoming a financial Advisor. Many employers consider a strong background in sales, financial services or customer service to be more important than formal qualifications. However for a person to be allowed to practise as an Independent Financial Advisor the Financial Services Authority (FSA), requires the following qualifications.

The entry level qualifications are the

Financial Planning Certificate
Certificate in Financial Planning (CertPFS

Both are issued by Chartered Insurance Institute (CII) and are about equivalent to a challenging GCSE. Treat them accordingly.

The most common advanced qualifications are

Advanced Financial Planning Certificate (AFPC)
Certified Financial Planner licence.

IFAs with higher level professional qualifications may have the letters APFS or FPFS after their names.

What about high level professional qualifications?

The highest professional status for a IFA is a Chartered Financial Planner which was recently introduced.

In addition to these qualifications the FSA requires all IFA to undergo Continuous Professional Development (CPD) to keep upto date with developments in the profession.

Throughout their career an IFA may take many advanced and more specialised qualifications to develop specific areas of expertise. You should ask your IFA about them because he or she will gain the more advanced qualifications as their career progresses making qualifications a useful benchmark of an Advisor's specific expertise and experience.

How are Independent Financial Advisors paid?

The vast majority of IFAs are paid by commission either in full or in part. The obvious problem with this is that the product offering the best commission may not be the best product for your interests.

The FSA recognised that this might be a problem and since depolorisation of the market in 2005 has required a financial advisor to provide clients the choice of either paying commission or a fee for advice. Despite the conflict of interest, consumers have been reluctant to pay for something they see that they already get for free.

Today there are three main ways an IFA receives payment.

Commission: Typically the advice of the IFA is paid for by a commission from the product provider. The size of the payment must be made known to the client. It is possible to obtain a rebate of part of an IFAs commission in some circumstances, most commonly in Execution-Only cases. The size of commission and whether it is included in the price of the investment or deducted from the amount you invest depends on the product. This is not free advice. The client pays for the commission in the cost of the product.
Fees: Offered by all IFAs, this can be cheaper than paying commission if the product is large, complex or specialist. Paying a fee for advice removes any incentive for an IFA to recommend a wrong product. This makes it a good way to ensure that the advice is impartial.
Combination: It is possible use a combination commission and fees. The IFA will refund part of the advice fee when a product is bought..

It is usually easy to find the cheapest option for each investment because the FSA require that the size and type of any payment to an IFA are made known to a client.

What are an Independent Financial Advisors obligations to a client?

FA are obliged by the FSA to provide the most suitable advice for your particular personal objectives, situation, requirements and appetite for risk.

To do this they usually conduct a “factfind” of a your financial position , preferences and objectives. It is important to be frank and open about your financial situation during this process. This is much easier if you have a personal rapport with your IFA. Using a well planned system for Choosing a Suitable Financial Advisor help make this more likely. Once the fact-find is done they are able to advise the most appropriate action need to meet the objectives and possibly recommend a financial product.

The FSA requires every IFA to tell you about the service they're offering and provide you a "Keyfacts- about our services" document. Insurance brokers may give you this information in another format. The document describes

the service on offer;
whose products they choose from; and
whether you'll have to pay a fee for the service or if they'll get paid by commission on what they sell you.


"This document is important – it can help you shop around and compare services, product ranges and costs, so make sure you are given one and if you're not, ask for one."

How to go about Finding a Financial Advisor

You can ask family of friends for a recomendation of someone they trust. Alternatively you can ask another professional you have experience of dealing with for a refferal. Professionals tend to know other profesionals and a have an opinon about them.

You can investigate any IFAs before doing business with them. Check that the firm is on the FSA Central Register and is allowed to give financial advice, .

The Central Register is available on the FSA website at
You can also make checks over the phone on 0845 606 1234.


In summary

Although the UK consumer financial market is among the most heavily regulated and thus the safest in the world, It is your responsibility to understand the terms on which you do business.

You can avoid many of the most common pitfalls by following these steps.

Only use an independent financial advisor listed on the Central Register
Choose an IFA you feel comfortable with.
Ask them about their qualifications and specialist areas expertise and choose on suitable to meet your goals.
Investigate whether you are better paying a fee rather then a commission.
Before purchasing a product or signing anything you must make sure you understand what you are being told.
Read the "key facts" documentation they will provide you. If they dont provide this, ask for it.
If you are unsure about something clarify it.

Financial Advice As a Profession in the United Kingdom

Financial advice and financial planning are two individually distinguishable practices, the former focusing on specific transactions, such as selection of a unit trust, and the latter focusing widely across a client's financial, and indeed life, objectives from a more holistic perspective. Financial advice could be described as sales oriented and target driven, whilst financial planning is more frequently positioned as a continuous and tailored service. However, despite this seemingly more favourable description of the practice of financial planning, it's important to point out that there are good financial advisers, bad financial planners, and vice versa. Financial advice can also be viewed as a subset within financial planning, but for the purposes of this text both disciplines will be considered as one and collectively termed as financial advice.

A profession can be described very simply as "a paid occupation, especially one involving training and a formal qualification" (Oxford, 2008), and in this respect a significant number of trades fall under the umbrella. Historically, however, only a limited number of occupations were termed professions, most notably law and medicine, and a vast array of measures have been developed to define the classification. One good description includes characteristics of "professional autonomy; a clearly defined, highly developed, specialized, and theoretical knowledge base; control of training, certification, and licensing of new entrants; self-governing and self-policing authority, especially with regard to professional ethics; and a commitment to public service" (Burbules & Densmore, 1991).

It could be argued that the provision of financial advice is a professional service based upon the depictions outlined above, but it's important to point out that this portrayal is tenuous in some respects. For instance, whilst advisers are required to demonstrate a level of autonomy and personal responsibility on a regular basis, the financial services sector lost its self-regulatory capacity some time ago and is now supervised stringently. In addition, whilst codes and qualifications have been developed by national and international trade bodies, the occupation is still comparatively young and therefore continues to grow - many of its facets having being serviced traditionally by accountants and solicitors in simpler times.

Financial advice delivered in the UK is generally funded indirectly through a commission built into products, or directly through a fee levied separately. Advisers currently gain their income from either one of these channels or from a combination of the two. Commission based advice can be preferable for a client because it's not immediately obvious that they are paying anything, whilst fee based advice can be less favourable given a client's intrinsic awareness that they are being charged.

Many industry spectators have, for a number of reasons, contended that the practice of commission based advice is wrong. It is argued that advisers are presented with an inherent conflict of interest where there is an incentive for them to suggest one product over another, because they could ultimately earn a greater income from commission. This idea of moral hazard could induce an unscrupulous adviser, for instance, to choose an investment that does not align with a client's risk appetite - purely to realise a more significant profit than had they selected a better suited product. Clients can be unaware of the level of commission they are paying, whereas fee based advice promotes greater clarity.

The debate surrounding commission based advice is particularly important due to the perceptions that consumers have about advisers. The financial services sector is seen as being very sales motivated whereas law and medicine, which are classically fee based for example, are not. This can be harmful because consumers consequently lack trust in practitioners such as advisers, who might in a consultation be felt to have an ulterior agenda of earning as much money through a client as possible - an unlikely sentiment with a doctor or solicitor on the other hand. Any efforts to modify consumer attitudes have hardly been aided by the gradual post-mortem of the recent financial crisis, where advisers have been labelled with a great deal of blame given their relaxed approaches in many cases and, in some cases, outright fraud. This is in addition to other scandals that the sector has suffered throughout the years such as mis-selling; and the fact that many advisers are employed or tied, and therefore limited in the products that they can suggest, introduces another element that could be manipulated.

In response to concerns relating to the practice of financial advice in the UK, the Financial Services Authority set out its intention as industry regulator to introduce change in consultation with relevant stakeholders, under the auspices of the Retail Distribution Review. Initial objectives of the RDR included enhancing factors such as product clarity, consumer needs, remuneration arrangements, professional standards, fair treatment, and effective regulation. Further to review, the FSA set out three proposals in its 2009 report.

The first proposal is that firms should be compelled to class their advice as either independent or as restricted. The implication here is that some advisers are currently employed or tied and therefore cannot make decisions for clients based upon the whole universe of potentially suitable products that exist, rather that they are limited to those instruments offered by their own or their preferred firms. This proposal is sensible because it is important that clients are made aware where their adviser is unable to offer completely impartial advice based upon the whole market of potential opportunities.

The second proposal is that commission based advice should be outlawed in favour of fee based remuneration. The existence of commission based advice can exacerbate occurrences of bad practice, where advisers could be encouraged to choose from a set of investment alternatives purely because a particular provider offers a higher rate of commission. Instead, advisers will be expected to set out fixed fees in advance so as to manage client expectations and encourage transparency.

The third proposal is that professional standards should be raised for advisers across the sector. This would involve the introduction of suitable qualifications and codes, to be overseen by a new professional standards board. Whilst the spirit of this proposal should be applauded, the planned actions are questionable however, in that such standards do already exist to a certain extent. A number of professional organisations are active including the Association of Independent Financial Advisers and the Institute of Financial Planning, each with their own ethical or professional codes. A broad range of industry qualifications are available from such bodies, and also from the Chartered Insurance Institute for example. The FSA should be cautious not to replicate any existing framework, primarily because such resources could in fact be taken advantage of, and also so as not to alienate important stakeholders.

Despite the positive nature of the RDR's proposals, there has been somewhat of an industry backlash, one body commenting that "we do not need second tier regulation" (AIFA, 2009). Some advisers believe that implementation of the RDR would strain their business interests and limit their ability to operate - "almost half of IFAs believe they will lose up to 80 per cent of their clients when the retail distribution review comes into force" (Welling & Carvill, 2009).

Whilst the practice of financial advice might align with definitions of professional occupations, it's clear that the sector still has some way to go in terms of turning around negative stereotypes about its practitioners, before it can truly be classed amongst the more established professions. Financial advice is an essential service offering for many consumers, and the FSA's RDR proposals should ensure that clients know where they stand, that they get a fair deal, and encourage an environment in which advisers are well qualified and uphold the highest standards of integrity. However, it's essential that the FSA establish a constructive working relationship with all relevant industry stakeholders including employers and trade bodies, so as to ensure that any implementation takes into account the concerns of those on the front line.

Getting Financial Advice - How to Make Sure You Get the Right Advice For Your Personal Finances

Once you have identified your goals, it is time to find out how to best go about achieving those goals. The financial services industry is a complex business, and there are few of us who could be expected to navigate its murky waters without help.

Perhaps the most important decision you can make when considering buying any financial product or service is the decision on the kind of advice you will seek out.

This is an area where some care is required. As complex as the financial services industry is, so too are the relationships of those who work within it, and you must be sure you understand the relationship between the person giving you advice and the product they are advising you on.

Always remember that the primary purpose of such advice is to help identify what your needs are, not to encourage you to purchase specific products. It may be that the best advice is to do nothing. Sometimes, an adviser will appear to go to a great deal of trouble on your behalf, in the hopes of encouraging you to feel obliged to stick with them - always remember you can say NO.

The rights you are entitled to in receiving advice vary according to the type of product. Check with the appropriate independent authority (as defined in various places in this guide, and in the Useful Information section) as to what your rights are with regard to a given product.

If you choose to buy a product without seeking advice, your rights are often less than they might be otherwise. In some cases, the attitude is 'you didn't seek advice, so it's your own fault'. While it may be appropriate in some cases to go it alone, getting good advice is always worth the investment.

What may seem like advice may not be - do not mistake information for advice! If you buy from a direct mail shot, through a website or from a 'direct' company, you may be considered to have not taken advice, as far as your rights go. Marketing material is not objective and impartial - an obvious point, but worth restating.

Broadly, the kind of advice you can get falls into two categories: independent and tied. Both have their advantages and potential pitfalls.

Tied Agents

Tied advisers generally sell and advise on the products of just one company. They may or may not work directly for that company - sometimes they simply have strong ties and a good working knowledge of that company's products. They may be able to get access to a good deal because of their exclusive relationship with the provider.

They can tell you which of the company's products suits your needs. They have a responsibility to advise you honestly, and if none of the company's products suit your needs they should tell you so. But always be aware that they are not necessarily trying to advise you on the best over-all product for you, but rather the best product that the company itself has to offer you. They should not tell you a product is appropriate for you if it is not, but sometimes what is 'appropriate' can be a slippery concept.

Tied agents almost always work on commission, though there is some movement towards having advisers tied to specific companies working for a flat fee. You may find it more comfortable to seek out one of these companies.

Citizen's Advice Bureau

The Citizen's Advice Bureau (Website: http://www.citizensadvice.org.uk) is an independent charitable organisation that focuses on giving advice on a whole range of subjects.

They are able to offer help in regards to issues such as debt, your rights, and general consumer issues. However, certain bureaux can offer specialist advice, often in conjunction with professional partners such as solicitors.

If things go awry, the CAB can help you to determine a way forward. They will help identify what your rights are, how to move forward with the issues, what kind of back up you can expect from various bodies etc.

The Financial Services Authority

The FSA is an independent non-governmental body that has statutory powers to regulate the financial services industry. Their funding comes from the industry itself, but the Treasury appoints the board. The FSA is guided by the Financial Service And Markets Act (Website: http://www.fsa.gov.uk), which came into force in June 2000.

One of their primary purposes is to secure the appropriate degree of protection for consumers. With this in mind they provide an excellent consumers guide that provides information on such things as consumer alerts, what to do if you have a complaint, a suite of comparative tables of similar financial services and even a firm check tool to find out if a company you are considering using are reputable and accredited.

Independant Financial Services

An independent advisor can nominally give you advice without you having to worry that they are pushing you towards a product that isn't right for you. If they are not tied to using products from a particular company, they are free to look at the various products on offer, and make suggestions based on what is best for your particular circumstances.

They can give advice on a variety of products. If they give advice on investments such as pensions, life insurance, unit trusts and shares, then they and the company they work for must be authorised by the Financial Services Authority, and must abide by their code of conduct. Those advising on loans, most mortgages, non-investment ('general') insurance, term insurance or bank and building society accounts need not currently be authorised, though from 31st October 2004 all mortgage advisors will have to register and be authorised by the FSA. From early 2005, general and term insurance advisors will also have to be authorised.

If you want to check to see whether a person or firm is authorised by the FSA, you can use their Firm Check Service.

Some care has to be taken when taking such advice. While an advisor may not work directly for a particular company, they do often have relationships with companies (sometimes with a suite of companies). Often companies will offer bigger commissions or other such inducements to advisors in the hope that that will encourage them to promote their product.

The only truly independent financial advice you can get is when the advisor has no stake in your final choice of product. This can only come about if you get advice from one source, and buy your product or service from another with no connection between the two.

However, financial services often will prefer one product over another because those products genuinely are better than their competitors - the advisor's reputations is founded on giving the right advice and achieving good results over time. In a sense, the advisor acts as a filter, discarding poorly performing or sub-standard products and focusing on the products that do perform.

When considering what advice to take, always establish what the point-of-view of your advisor is, and how that will affect the kind of advice they give.

You pay advisors in one of three ways: a one-off fee, a commission on any products bought, or a combination of the two. Always establish from the start what the deal is. The Financial Services Authority has decreed that from late 2003 all independent financial services must let you pay them with a flat fee if you wish to. This removes the temptation to recommend a product that pays them better commission.

Finally, it is always worth asking whether the advisor will be prepared to take a cut in their commission in order to give you a better deal (called a 'commission sacrifice'). They won't always agree, but if you don't ask you certainly won't get. Sometimes they will consider it worthwhile in order to get your custom.